Industry

Going Underground

Mining

As the extraction numbers of minerals increase, companies are developing new projects to exploit the heightened demand for industrial and precious metals.

GOLDEN HILLS

Anglo Asian Mining is one of the main gold and silver mining companies in Azerbaijan, along with Azerbaijan International Mineral Resources Operating Company (AIMROC). The company has the rights to six deposits in Azerbaijan: Gedabek, Ordubad, Gosha Bulag, Gyzyl, Vezhnali, and Soyutlu. Under the terms of the production-sharing agreement (PSA) it signed with the government, the company is able to mine up to 400 tons of gold, 2,500 tons of silver, and 1.5 million tons of copper. In 1H2012, Anglo Asian turned over a profit of $10.5 million, with total revenues of $30.1 million. In the first half 2012, it sold 18,135 ounces of gold at an average price of $1,644, down compared to the same time the year before, when the company sold 25,586 ounces of gold at the lower price of $1,450. The company’s average cost of mining one ounce of gold is $767. The company plans to increase its production by the end of 2014 to between 80,000 and 90,000 ounces of gold per year. Currently, Anglo Asian currently operates two mines, the Gedabek and Gosha gold deposits. The former is the largest, with the JORC-compliant resources report estimating 1.05 million ounces of gold, 8.61 million ounces of silver, and 81,765 tons of copper. The target annual production of the Gedabek mine is between 49,000 and 51,000 ounces of gold. The Gosha gold deposit is a smaller operation located approximately 50 kilometers away from Gedabek on a 300-square-kilometer site. Operations will begin in the second half of 2013, and Anglo Asian expects it to be a small, profitable, and high-grade mine. The operators believe the mine will be able to produce 10,000 to 15,000 ounces of gold per year for up to five years. To help increase the lifespan of the mines, Anglo Asian is introducing new techniques to improve output. After the leaching process, the ore is then agitated to increase the gold output of oxides and sulfides by up to 85% and 69%, respectively. The overall increase in output could be up to 20%.

THE FUTURE’S BRIGHT

AIMROC is the second main gold mining company in Azerbaijan. A PSA was formed in 2006 between the government and representatives from the company, which was later approved by parliament. AIMROC has the rights to sites in Garadagh, Chovdar, Goydag, Dagkesaman, Kohnemadan, and the Kurekchay river basin. It is currently concentrating its efforts on the Chovdar mine, which produced its first gold bar in October 2012. The Chovdar mine is estimated to have 40 tons of gold in reserves, which should last about eight to 10 years at current extraction rates. AIMROC plans to recruit 200 more mining engineers over the next 20 years. The main problem is trying to attract engineers into the mining sector, rather than the more desirable oil and gas sector.

Gold production is expected to increase by an annual rate of 1% according to the government, and silver production is expected to increase at a modest rate also. However, the production of copper will see the biggest growth. For 2013, approximately 885.7 tons will be mined, while in 2014 an estimated 1,062 tons. In 2015, the country will produce 1,275, and then a massive jump in 2016 will see the total amount of copper and concentrates reach 2,362 tons.

The numbers in the mining sector are looking healthy for the future as production values increase. As the government plans a shift away from an oil-and-gas-led economy, the mining industry would make a solid backbone for any economy, especially one so rich in multiple resources.

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